Sunbeam 2006 Annual Report Download - page 68

Litigation
The Company and/or its subsidiaries are involved in various lawsuits arising from time to time that the Company consid-
ers ordinary routine litigation incidental to its business. Amounts accrued for litigation matters represent the anticipated costs
(damages and/or settlement amounts) in connection with pending litigation and claims and related anticipated legal fees for
defending such actions. The costs are accrued when it is both probable that a liability has been incurred and the amount can
be reasonably estimated. The accruals are based upon the Company’s assessment, after consultation with counsel (if deemed
appropriate), of probable loss based on the facts and circumstances of each case, the legal issues involved, the nature of the
claim made, the nature of the damages sought and any relevant information about the plaintiffs and other significant factors
that vary by case. When it is not possible to estimate a specific expected cost to be incurred, the Company evaluates the range
of probable loss and records the minimum end of the range. The Company believes that anticipated probable costs of litiga-
tion matters have been adequately reserved to the extent determinable. Based on current information, the Company believes
that the ultimate conclusion of the various pending litigation of the Company, in the aggregate, will not have a material
adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
Product Liability Matters
As a consumer goods manufacturer and distributor, the Company and/or its subsidiaries face the risk of product liability
and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of
warranty returns or other returns of goods.
The Company and/or its subsidiaries are therefore party to various personal injury and property damage lawsuits relating
to their products and incidental to its business. Annually, the Company sets its product liability insurance program which is
an occurrence-based program based on the Company and its subsidiaries’ current and historical claims experience and the
availability and cost of insurance. The Company’s product liability insurance program generally is comprised of a self-insur-
ance retention per occurrence and an aggregate limit on exposure.
Cumulative amounts estimated to be payable by the Company with respect to pending and potential claims for all years in
which the Company is liable under its self-insurance retention have been accrued as liabilities. Such accrued liabilities are
based on estimates (which include actuarial determinations made by an independent actuarial consultant as to liability expo-
sure, taking into account prior experience, number of claims and other relevant factors); thus, the Company’s ultimate liabil-
ity may exceed or be less than the amounts accrued. The methods of making such estimates and establishing the resulting lia-
bility are reviewed on a regular basis and any adjustments resulting therefrom are reflected in current operating results.
Based on current information, the Company believes that the ultimate conclusion of the various pending product liability
claims and lawsuits of the Company, in the aggregate, will not have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows.
Securities and Related Litigation
In January and February 2006,purported class action lawsuits werefiled in the Federal District Court for the Southern
District of New York against the Company and certain Company officers alleging violations of the federal securities laws. The
actions purport to be filed on behalf of purchasers of the Company’s common stock during the period from June 29,2005
(the date the Company announced the signing of the agreement to acquire Holmes) through January 12,2006.
The complaints, which are substantially similar to one another, allege, among other things, that the plaintiffs were injured
by reason of certain allegedly false and misleading statements made by the Company relating to the expected benefits of the
THG Acquisition. Joint lead plaintiffs were appointed on June 9,2006.No class has been certified in the actions.
The lead plaintiffs filed an amended consolidated complaint on August 25,2006,against the Company, Consumer solu-
tions and certain officers of the Company, containing substantially the same allegations as in the initial complaints. The
Company, Consumer solutions and the individual defendants filed a motion to dismiss the complaint on October 20,2006.
That motion has been fully briefed. Oral arguments on the motion to dismiss wereheld on February 2,2007,but the Court
has not yet issued a decision.
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Notes to Consolidated Financial Statements
Jarden Corporation 2006 Annual Report